DEPARTMENT OF AGRICULTURE COMMODITY CREDIT CORPORATION The limitation under this heading in the Department of Agriculture and Farm Credit Administration Appropriation Act, 1955, on the amount available for administrative expenses of the Corporation is increased from "$18,000,000” to “$25,290,000”. An increase of $7,290,000 will be required in the administrative-expense limitation of the Commodity Credit Corporation to provide for increased administrative costs as a result of increased loan volume and to perform storage, inspection, maintenance, accounting, and other work in connection with the management and disposition of inventories acquired by the Corporation under the price-support program. The Corporation has the task of managing and disposing of large inventories of agricultural commodities which have accumulated during the past few years and at the same time making settlements with thousands of producers, elevators, warehousemen, and others, incident to the acquisition of additional inventories from past-year crop operations. In addition, the Corporation must be in a position to provide price support through loans, purchases, and other means on currentyear crops. The need for this increase arises principally out of an underestimation of (1) the complexity and amount of work involved in managing the disposing of huge inventories of agricultural commodities acquired under the price-support program, and (2) the volume of loan work in connection with 1954 crops of pricesupported commodities. On July 26, 1954, I apportioned the amounts available to the Commodity Credit Corporation for administrative expenses in the fiscal year 1955 on a basis which would indicate a necessity for an increase in the administrative-expense limitation. This action was reported to the Speaker of the House of Representatives and to the President of the Senate by my letters of July 26, 1954, in accordance with the provisions of paragraph 2 of subsection (e) of section 3679 of the Revised Statutes, as amended. I recommend that the foregoing proposed provision be transmitted to the Congress. Respectfully yours, ROWLAND HUGHES, Director of the Bureau of the Budget. Mr. WHITTEN. We shall insert in the record at this point pages 1 through 8 of the justifications, table 1, and pages 9 through 15 of the justifications. (The information is as follows:) DEPARTMENT OF AGRICULTURE, COMMODITY CREDIT CORPORATION Administrative Expenses, Commodity Credit Corporation PURPOSE AND NEED FOR SUPPLEMENTAL FUNDS The increase of $7,290,000 consists of (a) an increase of $6,392,000 due to the estimated increase in the volume of price support activity over the volume of activity upon which the 1955 Budget Estimates were predicated and, (b) an increase of $898,000 for increased responsibilities and workload of the State Agricultural Stabilization and Conservation Offices. Almost ninety percent of the total increase requested is due to changes in estimated program volume and is sharply demonstrated by the comparison of the volume upon which the 1955 Budget Estimates were predicated with current estimates of program volume. Loans Made.-When the 1955 budget estimates covering the administrative expense limitation of the Commodity Credit Corporation were prepared they were based on a program volume relating to crops most of which were not even planted. The Crop Report released on November 10, 1954, indicated that production prospects are again at a near-record level. In addition, the latest report of the volume of 1954 grains placed under price support indicates that these grains are going under price support at a higher rate than occurred during the previous years. Consequently, except for corn, the production of which has been reduced by the recent drought, the estimates of the amount of grain to be placed under price support have been revised upward. A 24-percent increase in cotton loans over the previous estimates is also indicated. Acquisitions. The estimated increase in acquisitions is primarily due to (1) the greater volume of collateral forfeited in connection with prior year loan programs for corn and cotton, (2) the likelihood that the decrease in the support price of certain of the 1955 crops will result in increased takeover of 1954 crops of wheat and other grains, and (3) a larger volume of dairy products to be purchased as a result of a larger production of milk than previously estimated. Dispositions.-The estimated increase in dispositions results primarily from a more aggressive sales policy implemented by a number of recent legislative enactments which considerably broadened the disposal authority of the Corporation. These include (1) title I of the Agricultural Trade Development and Assistance Act of 1954, which authorizes the sale of surplus commodities for foreign currency. It is estimated that $400 million worth of commodities will be disposed of in connection with this program. (2) Title II of this same act which authorizes the use of CCC surplus commodities in meeting famine or other urgent relief requirements of friendly nations. It is estimated that $120 million worth of commodities will be disposed of in connection with this program. (3) Barter and exchange activity which has been emphasized and implemented by new legislation, particularly section 303 of the Agricultural Trade Development and Assistance Act of 1954. During the fiscal year 1954, $29,436,781 worth of commodities were involved in the barter and exchange programs of the Corporation. It is anticipated that this program will increase to $200 million in the fiscal year 1955. (4) An amendment to section 416 of the Agricultural Act of 1949 permits donation of commodities to prevent waste and authorizes the Commodity Credit Corporation to pay reprocessing, packaging, transporting handling and other charges. Cost value of donations of butter, nonfat dry milk, cheese and cottonseed oil are estimated at $262 million, which is an increase of $47 million over the original estimate. (5) An amendment to section 407 of the Agricultural Act of 1949 authorizing the donation of commodities to distress and disaster areas in the United States. It is estimated that $64,430,000 worth of feed grains will be disposed of in connection with the current drought program. A summary of the $7,290,000 proposed increase is as follows: (a) Due to changes in estimates of program volume: (a) Special School Milk Program_- $442, 000 4, 715, 445 $5, 157, 445 $185,000 104, 800 289, 800 727, 755 217, 000 6, 392, 000 (b) Section 416 disposals.--. (3) Washington divisions and their field offices- Total, due to changes in program volume_ (b) Due to increased responsibilities and workload of the State offices: (1) Supervision of county offices... (2) Grain storage Structure Program.... Total, State offices__. $710,000 898,000 7, 290, 000 Total increase___ It is estimated that the corporation's administrative expense limitation will be fully obligated in March. (A) DUE TO CHANGES IN ESTIMATE OF PROGRAM VOLUME Commodity Office Increase. The major portion, or $5,157,445, of the increase of $6,392,000 will be required by the CSS Commodity Offices. The workload and expenses of these offices vary directly with the volume of commodities handled and are estimated on the basis of a detailed work measurement reporting system. The major portion of the workload is comprised of the transactions relating to the acquisition, management, and disposition of inventories and consists of the negotiation and allocation of storage space, inspection of storage facilities and commodities, payments of warehouse charges and amounts due on settlements of loading orders, issuance and control of loading orders for the disposition and reconcentration of commodities, handling of bills of lading, payment of freight bills, and negotiations, payments and billings in connection with the purchases and sales of the commodities. These inventory management activities and the related accounting activities comprise approximately 70 percent of the total workload of these offices. Tables 1 and 2 attached reflect the estimated volume of program operations for the fiscal year 1955 and the volume in terms of man-year requirements for the CSS Commodity Office operations. In converting the workload into man-year requirements for these offices, the same productivity rates were applied that were used in determining current fund allocations for these offices. It should also be noted that these productivity rates are approximately 24 percent higher than the rates used in the budget estimates for the fiscal year 1955 and approximately 7 percent higher than the rates actually attained during the fiscal year 1954. The CSS Commodity Office increase also includes funds for changes in warehouse examination responsibilities. Because of the increased program volume and the tremendous quantity of grain inventories accumulated during the fiscal years 1953 and 1954, it became necessary this fiscal year to strengthen and improve the grain warehouse examinations conducted by the corporation. Prior to this fiscal year, responsibility for grain warehouse examination has been performed in part by the State and county offices and in part by the CSS Commodity Offices. Generally, in the past, CSS Commodity Office employees have examined the terminal and subterminal warehouses and county office employees have examined the country warehouses. It is now contemplated that responsibility for examination of all warehouses other than CCC-owned bins will be placed in the CSS Commodity Offices. This will increase the workload of the CSS Commodity Offices by approximately 8,000 warehouses and the expenses by $442,000. This additional workload and greater efficiency is reflected in line item 03 of the attached table 2. This latter amount would be largely offset by lower CCC costs at the county level which are paid from capital rather than administrative funds. With the tremendous increase in CCC grain inventories, only the most coordinated and straight-line authority for warehouse examination work will adequately protect the interests of Government in the grain it owns. The State and county ASC offices have the huge job of administration of price support, acreage control, and other programs at the farm level. Since the warehouse examination work, in most cases constitutes only part-time work of county employees not essentially trained in this type of work, it is felt that this function will be more effectively performed by more qualified employees devoting full-time to warehouse examination. In addition to the greater efficiency which should result by having full-time employees assigned to this function it is believed that a more coordinated and systematic examination will follow since supervision, instructions, and procedures will originate in 5 rather than 48 locations. It is believed also that examination of warehouses by other than local employees will not only have a more restraining effect upon warehousemen who might be tempted into wrong-doing, it will also foster improved relationships between the warehousemen and CCC. The remainder of the increase due to changes in estimates of program volume ($1,234,555) consists of: (1) Transfers to Agricultural Marketing Services ($289,800) (a) Of this amount $185,000 is required to carry out the special school milk program authorized by an amendment to Section 201 of the Agricultural Act of 1949, which was passed by the Congress subsequent to the formulation of the 1955 Budget, permitting the corporation to use not to exceed $50.000.000 of its funds to support dairy prices by providing for increased fluid milk consumption by children in nonprofit schools. In carrying out the assigned responsibilities under the Special School Milk Program the Agricultural Marketing Service will perform the following functions: 1. Distribute funds among the States on the basis of a formula similar to that provided in the National School Lunch Act. 2. Furnish technical and supervisory assistance to the States in the operation of the program. 3. Perform administrative reviews and audit operating records of States and private nonprofit schools. 4. Account for the use of the funds in accordance with established procedures. The special school milk program will be administered through offices already established and to some extent will receive technical and supervisory assistance from staff members presently administering the present school lunch program. Consequently, the cost of administering the special school milk program is relatively low in relation to the cost of administering the present school lunch program, considering the relative size of the two programs. (b) The balance of $104,800 is required to perform the additional workload applicable to the distribution of commodities from CCC stocks pursuant to the recent amendment to section 416 of the Agricultural Act of 1949 liberalizing the methods for these donations. During the fiscal year 1954 donations of dairy products amounted to 158,140,764 pounds. For the fiscal year 1955 it is estimated that 626,088,337 pounds of dairy products and 85,000,000 pounds of refined cottonseed oil will be donated. (2) The Washington divisions will have considerably more auditing, accounting and inventory management responsibilities as investment in price support mounts. Additional funds ($727,755) will be required with the major increases occurring in the Fiscal Division, $193,320; Barter and Stockpiling Division, $115,764; Grain Division, $66,557; Audit Division, $58,318; and Compliance and Investigation Division, $34,700. (3) Printing ($217,000) of forms required in loan purchase, inventory and accounting operations. (B) INCREASED RESPONSIBILITIES AND WORKLOAD OF THE STATE OFFICES The increase of $898,000 for increased responsibilities and workload of the State offices is composed of the following: (1) An increase of $710,000 to provide more effective supervision of ASC county committees in the administration of CCC price support programs. The number of farmer fieldmen and auditors employed in 1954 in the Agricultural Stabilization and Conservation State offices will not be adequate for the ncreased workload on CCC price support programs. In 1954, there was an average of only 1 farmer fieldman for slightly over 12 county committees and in some States with major program responsibilities, the number of county committees per farmer fieldman ranged from 15 to 21. This estimate would provide a partial correction of the deficiency in supervision of county offices. Additional funds for other programs operating through ASC State offices which are included in the 1956 estimates would lower the average to 10.1 county offices per fieldman. This would still constitute a heavy workload since farmer fieldmen supervise all programs carried out through ASC County Offices and while it does not represent the optimum average, it will enable progress to be made toward more efficiency economical operations. There was only one county auditor for over 27 county committees in 1954 with the average workload in some States ranging from 39 to 60 county committees per auditor. Additional auditors provided under this estimate would reduce the national average to slightly over 25 county committees per auditor. Funds included in the 1956 estimates for other programs operating through ASC State offices would further reduce the average to slightly under 22 county committees per auditor. Since auditors review all programs, the latter coverage will provide an audit program more in line with the overall volume of program operations. The work under CCC price support programs in 1954 included activities in about 3,000 counties where price support programs are offered, work preparatory to the making of about 1.2 million CCC lcans on various commcdities in about 2,400 counties, negotiating agreements with about 9,000 lending agencies, performing about 1,600,000 reinspections of farm stored commodities, the acquisition of commodities under loan or purchase agreement in about 450,000 instances and the receipt and recordation of about 170,000 repayments on loans. It is anticipated that the workload will increase considerably in 1955 expecially in connection with the reinspection of farm stored commodities, the repayments on loans and the acquisition of commodities. These increases in workload are indicated by the increased volume of loans, repayments, etc., of the principal crops for which the county committees handle the price support work, as shown by the following table: Anticipated change in terms of percentages, increase (+), decrease (—) Seeds: Hay and pasture, none anticipated for 1955; winter cover crop, none anticipated for 1955. In addition to an increased volume of work in connection with price support activities in the fiscal year 1955 effective January 1, 1955, responsibility for supervising the liquidation of loan programs handled at the county levels will be placed at the State office level rather than at the commodity office level as heretofore. This will permit the States to check loan records with the counties' cumulative reports of commodity loan and purchase agreements and determine causes of discrepancies in loan transactions thereby relieving the commodity offices of the necessity of reconciling each individual county's report and calling attention of the county to discrepancies in its records. The increased work in the State offices for this purpose is partially offset by a decrease in the work in the CSS commodity offices which has been given effect in the estimated requirements for those offices for 1955. (2) An increase of $188,000 to strengthen supervision and administration of CCC grain storage structure program by State Agricultural Stabilization and Conservation Offices in an attempt to overcome existing inadequacies in the operation of the program. |